No e-voting for JP Ventures rejig move

Experts say non-compliance with law but firm says this is a different case, exempted under a 2013 circular

Jaiprakash Power Ventures, part of the Manoj Gaur-led Jaypee group, has called for a shareholders' meeting later this week to approve its restructuring proposals but has not offered the e-voting facility.

Company law experts contend e-voting is mandatory under the new companies law and the amended listing agreement provisions from the Securities and Exchange Board of India (Sebi). The company argues an exemption provided by a 2013 circular continues to apply for mergers and such schemes approved by the court.

“The basic objective of mandating e-voting is to increase participation, especially when the meetings are held in remote locations. There is no special exemption to court-convened meetings under the listing agreement,” said Pavan K Vijay, former chairman of the Institute of Company Secretaries of India and managing director, Corporate Professionals.

TO E-VOTE OR NOT?

• Jaiprakash Power Ventures has issued notice for court-convened meeting on Saturday near Shimla
• JP Ventures has not provided for e-voting
• Sebi made e-voting compulsory for all shareholder meets, postal ballots under 2014 listing agreement
• Company says theirs is a different case, covered under other rules
• Proxy firms, experts say e-voting applicable for all meetings

J N Gupta, a former Sebi official and managing director, Stakeholders Empowerment Services( SES), a proxy advisory entity, also opined that the listing agreement amendments superseded the earlier circulars. And, that Jaypee Power was not in compliance. In a note, Gupta’s SES said: \"Non provision of e-voting facility to shareholders is not only non-compliance with the listing agreement but an extremely poor governance practice. More so as the venue of the meeting is in a place not easily accessible. Therefore, SES is of the opinion that this step is aimed at ensuring that with the exception of interested parties (promoters and management) no one else participates in the meeting.”

The note added SES felt the disclosures made by the company in its notice were meaningless unless the shareholders were enabled to participate. The meeting to approve the scheme, part of the group's efforts to bring down its debt burden, is scheduled for Saturday at the company’s registered address — JUIT Complex, Waknaghat, P.O Dumehar Bani, Solan District, Kandaghat–173 215, Himachal Pradesh. The location is an hour’s drive from Shimla.

When Business Standard asked if the company had made any arrangement for shareholders to reach this location, a Jaiprakash group spokesperson said, “These are meetings convened under the orders of the high court and the procedure prescribed under the Companies (Court) Rules, 1959, is being strictly followed. No such arrangement for providing transport is envisaged either in the Companies (Court) Rules or by the HC.”

Adding:“The amendments made in Clause 35B of the Listing Agreement through the Sebi circular dated April 17, 2014, prescribing the requirement to provide e-voting facility to shareholders is applicable in respect of shareholders’ resolution to be passed at general meetings or through postal ballot. Since this is a special meeting convened by the HC (order), the requirement of providing e-voting facility is not applicable in our case, specifically in view of the exemptions granted by Sebi vide its circular of May 21, 2013.”

SES asked the shareholders to vote against the scheme and to seek more details on the valuation of power projects such as Baspa-II and Kachram Hydel. “Given the fact that all the four layers or, rather, five layers (initial company estimate, independent valuer, independent merchant banker, audit committee and the board) agreed and found the value arrived at as gospel truth, SES is not willing to question these; however, itseeks more disclosure, so that doubts in any quarter can be put to rest. SES finds the entire valuation process opaque and, therefore, cannot call it fair unless further disclosures are made.”

Saying the independent valuers had taken into account all the relevant aspect, the Jaypee spokesperson said: “SES has a full right to its own opinion on any proposal of the company; so do others. Incidentally, IiAS, another proxy advisory firm, recently recommended the resolution for approval of the shareholders. We would have clarified the doubts of SES, had these been referred to us. Unfortunately, they have preferred to publish/circulate these. It is pertinent to add here that stock exchanges and Sebi have already vetted the scheme and given their requisite observations.”

Gupta of SES said, “Our comments are based on what is disclosed to all shareholders. As a policy, we do not reach out to the company and seek additional information and create an asymmetry of information. The company should make adequate disclosures to all shareholders.”